Spot the Speculator #10 – Albertan Example of ‘Speculation Disguised As Normal Behaviour’

From ‘Getting real: Bull run coming to an end for Canada’s housing’ by Garry Marr, Financial Post, 6 Aug 2010

“Erica and Jeff Manger never thought the price of their house could drop. The Alberta couple bought a condominium in the Rockies resort town of Canmore three years ago and when they decided to move in 2008 to Sylvan Lake in Alberta, where they could afford a detached home, they kept the condo as an investment. “It never occurred to us that we wouldn’t be able to sell for what we paid,” says Ms. Manger. “People were making $100,000 [on paper] a year on their condos.” Now they’d be lucky to get the $315,000 they paid for their condo, even though it may have fetched $345,000 in 2008 when they were thinking about selling it to help pay for their new home. Instead, they’re getting $1,100 a month in rent for an investment that costs them $1,800 a month to carry and isn’t going up in value.
It gets worse. They have to sell the house in Sylvan Lake because Jeff, who is a helicopter pilot, is looking for a better location for work. They paid $375,000 for the house and fixed it up. Not even counting Jeff’s labour, the couple spent another $30,000 on supplies. “We tried to sell it and put it up for $409,000. We lowered it to $385,000 when we hired a realtor, but that didn’t work,” says Ms. Manger.“We lowered it again and now we are down to $374,900,” she says about the home that has now been on the market for two months. “We’ve lost all of our downpayment, which was almost $30,000.”

19 responses to “Spot the Speculator #10 – Albertan Example of ‘Speculation Disguised As Normal Behaviour’

  1. Bleeding $700 a month on the condo!! Time to cut your losses and dump it.

  2. You know what’s sad? The baby didn’t have any choice in the matter. We’re all speculators now.

  3. Wow, three moves in three years with a family! I guess they thought renting would be “throwing their money away.”

  4. Did they actually believe they could expect price appreciation of $100k per year on a $315k condo in Canmore? That’s ludicrous even by BC standards……

    “It never occurred to us that we wouldn’t be able to sell for what we paid,” says Ms. Manger. “People were making $100,000 [on paper] a year on their condos.”

    Anybody as peripatetic as these two should always rent first….

  5. Average family sees no problem with being $600k in debt. But with such large numbers and so little margin for error, things don’t work out perfectly.

  6. Sorry, a little off target. To my dismay, I noticed that the property from Speculator 4 has been delisted. https://vreaa.wordpress.com/2010/07/08/spot-the-speculator-4-i-can-sleep-at-night-okay-laughter-thats-a-good-thing-hes-invested-in-two-other-houses . I was hoping to see it listed to perpetuity.

    http://www.realtor.ca/propertyDetails.aspx?propertyId=9719689

    V840754

    Is there a way to tell how much it was sold for?

  7. Tim,

    I couldnt tell you what it sold for, but I bet this guy can.

    http://vancouver.en.craigslist.ca/van/apa/1870050470.html

    The email is different than the guy in the article so it likely sold and was not delisted.

    The fact that the ad used all caps means he is pretty damn excited I can tell ya that much.

    • For the record, here are the contents of the craigslist posting found by davers:

      $1000 / 2br – BASEMENT FOR RENT (296 E. 64TH AVE)
      Date: 2010-07-29, 11:28AM PDT
      Reply to: MDHOSSAIN344(at)GMAIL.COM [Errors when replying to ads?]

      NEWLY RENOVATED 1100 SF. 2 BEDROOM & DEN BASEMENT SUITE FOR RENT. 1 BLOCK FROM NO. 3 BUS, 1 BLOCK FROM SUPERSTORE, 2 BLOCK FROM SCHOOL & PARK. RENT START FROM SEPT. 1ST. CALL : 778 233 3912 ( PLEASE CALL ME AFTER AUGUST 10TH)

      * cats are OK – purrr
      * Location: 296 E. 64TH AVE
      * it’s NOT ok to contact this poster with services or other commercial interests

      PostingID: 1870050470

  8. $689,000

  9. Bailing,

    If thats right, that sucks; he still made a profit flipping in a downward market.

    He paid 580K, probably did 30-40K in renos paid about 30K for realtor fees and closing costs on the buying and selling, leaving him with about 30K in his pocket.

    Now if you factor in his time, I wonder what his hourly wage was for all his troubles…

    How did you find the selling price anyway? Just wondering, it would be nice to find out how much some places sell for.

  10. Bailing in BC

    The question is, will the guy work out that he just squeaked through before the door shut or will he try the same thing again and get his tale cut off?

    As for the sale price, I have a pet realtor. Every home should have one.

  11. davers, Nice find with the posting on Craigslist. Very interesting with the upper-case writting. There are some grammatical errors in his writing too. I always associate that behavior with someone uneducated.

    The flipper probably had to pay, at a minimum $3k per month on the mortgage. The post states that he purchased 11 weeks ago… assuming that he needed another couple of weeks for it to close, that accounts for around $10k that he needed to go toward his mortgage. His profit *might* be a little less than your estimate, but all in all, you’re probably not far off. Thanks guys…. I need to find myself one of those pet realtors.

  12. @ davers // 8 August 2010 at 2:40 pm

    I wouldn’t say that this “sucks” since the seller had to slash his price by $40k right out of the gate (assuming $689k sale is correct). Maybe that was the strategy all along? The quick turn around would suggest that this was indeed a sale, not a delisting as some have suggested (ie. why delist your flip after only 2 or 3 wks?). All one would have to do is make a quick call to your realtor to confirm this. I also wouldn’t be surprised if seller took the first and only offer he got on open house weekend. In this game of pass the hot potato, you can’t blame the guy though. I doubt he paid $30-40k for renos (try 1/2 this amount) and $30k in realtors fees since he is likely in business with the agent (if he smart) meaning they could have pocketed >$75k. Not sure if the Aug 10 date in the craiglist ad is significant. Hey, maybe the buyer hasn’t even removed conditions yet? and may not do so until a good tenant has been lined up? Anyhow, watch for this property to hit the market in the not too distant future with a different coat of paint and some nice new shrubs etc @asking price of $799k. This guy dodged a bullet. Maybe next time around, there won’t be a “greater fool”?

  13. Oh yeah, I almost forgot. What is the acct # for the Save The Manger Family Trust Fund? After I’m done with them, I’ll hand the rest of my cash over to the US Govt (apparently they are in a bit of a jam)

    https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454

  14. Bailing in BC

    The sale price of $689,000 is correct – straight from the mls.

  15. in the orriginal article he mentioned he had already purchased two others, with a laugh too…

  16. bullwhip29 said: “This guy dodged a bullet. Maybe next time around, there won’t be a “greater fool”?”

    Agree.
    Suddenly the last concentric ring of buyers will evaporate and all holders with any speculative incentive (read: ‘everybody’) will be left floating in interplanetary space.

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